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Why festive sales are likely to bring cheer for e-tailers

Two of the country’s biggest e-commerce platforms, Flipkart and Amazon, have their flagship sales — Big Billion Days and Great Indian Festival, respectively — ongoing since September 23.

According to industry estimates, in the last five years, e-commerce platforms have derived almost a fifth of their annual gross merchandise value (GMV) from the week-long festive sale periods.

In the first two days of the ongoing festive sales by e-commerce platforms, the number of orders have been 28 per cent higher compared to last year. Over two-thirds of the orders are coming from tier-2 and tier-3 towns and cities. Every year, e-commerce companies launch these festive sales to drive consumption, but after two years of Covid-caused lull, this year assumes greater significance as platforms, sellers, logistics partners and even banks come together to attract shoppers to these platforms.

Which e-commerce platforms have festive sales ongoing?

Two of the country’s biggest e-commerce platforms, Flipkart and Amazon, have their flagship sales — Big Billion Days and Great Indian Festival, respectively — ongoing since September 23. Social commerce player Meesho too has launched the Meesho Mega Blockbuster Sale, while Reliance Retail’s JioMart launched a month-long Tyohaar Ready Sale. Snapdeal has also launched its ‘Toofani Sale — Festive Dhamaka’. These sales tend to drive users to high-volume goods like consumer electronics, mobiles, kitchen appliances, personal care goods, apparel, etc, by offering deep discounts on such products.

Aren’t e-commerce platforms prohibited from offering discounts?

Yes, e-commerce platforms with foreign investment are prohibited by the foreign direct investment (FDI) norms from offering discounts themselves. Many of the discount deals offered on these portals during the festive sales are offered either by sellers themselves, brand partners such as electronics brand manufacturers or banking partners like SBI Card, HDFC Bank, Axis Bank, etc. However, some platforms are incentivising sellers to offer these discounts to drive volumes.

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Sales in 2021

As per industry estimates, last year, of the total online retail gross merchandise value (GMV) of $50.5 billion, festive season accounted for $9.3 billion

For example, earlier this month, weeks before the sales went live, Amazon announced that all new sellers registering on the platform between August 28 and October 26 and launching within 90 days from the date of registration shall be eligible to avail 50 per cent waiver on selling fees across all categories. Flipkart had also informed sellers that it would charge a one-time fee of Rs 5 on orders received during the pre-Big Billion Days sale, and that the company would waive off that fee for sellers who later participate in the flagship event from September 23-30.

Why are these festive sales vital for e-commerce platforms and how have they fared this year?

According to industry estimates, in the last five years, e-commerce platforms have derived almost a fifth of their annual gross merchandise value (GMV) from the week-long festive sale periods. For example, in 2021, of the total online retail GMV of $50.5 billion, festive season accounted for $9.3 billion; while in 2020, it was $7.4 billion out of the annual GMV of $38.2 billion. For platforms like Amazon, the sales also serve as a growth engine for loyalty programs such as Amazon Prime. According to the company, Amazon.in saw the single largest day of Prime signups — 1.9 times higher than last year — with 68 per cent coming from Tier 2 and 3 cities. Social commerce platform Meesho said that Tier 2, 3 and 4 cities accounted for approximately 85 per cent of orders on day one of its sale — with orders coming in from places including, Jamnagar, Alappuzha, Chhindwara, Davengere, Hassan, Gopalganj, Guwahati, Siwan, Thanjavur and Ambikapur. As per Unicommerce, a SaaS platform servicing e-commerce companies, personal care segment is the fastest growing segment with over 70 per cent year-on-year (y-o-y) order volume growth during the first two days of the festive season sale of 2022. While the electronics segment has reported a 48 per cent y-o-y order volume growth (excluding mobile phones). The strong growth of electronics is driven by audio products and smart wearables. The fashion industry continues to be the dominant category, with maximum order volumes.

First published on: 27-09-2022 at 02:29 IST
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